Unlike other jurisdictions, such as the UK, it is not possible to incorporate a company “off the shelf” in Saudi Arabia. The process of establishing a company or branch in Saudi Arabia involves a number of regulatory steps, including approval from the Ministry of Investment if there are foreign (non-GCC) shareholders, the Ministry of Commerce and Investment, the notary public, and the Chamber of Commerce. Subsequent to obtaining its commercial registration, a number of governmental registrations are required, including the Ministry of Labour and the General Organisation for Social Insurance.
The most common corporate vehicles in Saudi Arabia are the limited liability company (“LLC”) and the joint stock company (“JSC”). LLCs have the benefit of a less formal structure (for example, no board is required unless there are more than 20 shareholders), meaning that it may be appropriate for a company with a single shareholder. Alternatively, a JSC may be the preferred entity for a company with multiple shareholders where prescribed corporate governance protections for shareholders are important and the company wishes to have the flexibility to issue debt instruments and sophisticated equity, such as preference shares.
Z&Co.’s commercial in-house support team led by Martin Creek plays an instrumental role establishing foreign companies into the Saudi legal framework.
